With the evolving business market and a dynamically changing financial realm, companies need a strategic finance department to help them navigate the challenges to come. This new finance function expands upon the standard analysis and planning, by making informed decisions around accounting, budgeting, and forecasting.
Growth, cost cutting, and asset optimisation are just a few of the skills needed by modern finance teams if they are to help their business hit long-term goals. They must use integrated, cutting-edge technology that offers real time data, which can then be mined for tactical purposes.
What is strategic finance and how can you inspire it?
Strategic finance is not about focusing on traditional accounting tasks but rather on higher-value activities such as:
- Accelerating business decision-making
- Unifying data from all business areas
- Finding forward-looking insights
- Using connected platforms as intelligent building blocks for financial models
- Packaging financial data in a way that the entire business can understand
Companies can utilise strategic finance to successfully plan, assess, and modify their course, using business intelligence from integrated systems throughout the organisation. They can accomplish long-term objectives, distribute resources appropriately, and subsequently boost company performance.
According to a Gartner report, by 2024 businesses will lower operational expenses by 30%, through integrating widely-adopted hyper-automation technology with newly formed operational processes. This trend shows that companies are rapidly moving towards strategic finance.
However, transitioning to strategic finance requires leadership to alter the organisational culture so that finance teams are no longer seen as a cost centre, and are instead utilised as a strategic development partner. The CFO and the finance team can then contribute more to business objectives.
Aligning strategic finance function to business strategy
Typically, conventional financial operations revolve around three statements: revenue, cash flow, and balance sheets. However, these statements alone are not sufficient to support strategic decision-making. While these metrics provide a quick glimpse into the company’s financial health, they don’t necessarily show the bigger picture.
For a successful strategic finance function, businesses need a forward-looking mindset that promotes continuous improvement, strong leadership that can take the initiative, and OneAdvanced tools that enable real time and automated financial management.
Financial strategy plays an integral role in planning. It typically involves goal setting, forecasting, and budgeting, which should all align with the intended direction. Here are a few suggestions for businesses to consider when aligning the finance function with wider business goals:
Balance vision and objectives
A strategic plan is only as viable as a company’s financial power. Finance can help to transform an unrealistic ambition into a more realistic target, thus having a positive influence on the overall direction. These goals may be business-wide or function-specific. And the plan could have objectives for acquiring new clients or diversifying sources of revenue.
Budgeting
Budgeting assists managers with the distribution of resources in line with several aims. It supports flexible forecasting and the tactical implementation of strategic financial plans. Therefore, when planning ahead, smart budgeting must be a key component.
Risk management
Finance teams must utilise data to identify risk and safeguard the company’s interests, whether it be a client not paying, a drop in market pricing, or dangerous loan conditions. Thus, they must devise a financial strategy carefully, keeping all the associated risks in mind.
Why Your Finance Team Should Focus on Strategy, Not Data Entry
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